Overhaul saves car sellers

By ELLEN READ

John Porteous and his son, Phil, run a small caryard.

But their business, built up over a couple of years, was turned upside down by the Government's change to frontal-impact regulations.

Rather than whinge about the Government, the pair hired a business coach and changed their strategy, advertising, finances, everything.

And they are taking another punt, like all entrepreneurs.

Any small business can get hit by a tidal wave. In the past, there were few support resources.

Today, technology and business savvy are widely available.

Small businesses can tap into expert advice - books, tapes, internet, consultants - and have a better chance of surviving.

A few years ago, Porteous had a successful business specialising in forklift hire to the Auckland Harbour Board, later, Ports of Auckland.

The forklift hire business belonged originally to John's father-in-law, the late Phil Zambucka - a well-known Auckland businessman who built and ran businesses, among them a scrap metal firm and a crane hire company.

Porteous was brought in by Zambucka to run his forklift business because of his background as a qualified motor mechanic.

Zambucka's business skills and Porteous' mechanical expertise were complementary and contributed to the growth of the business, which Porteous eventually bought when Zambucka wanted to retire.

But when the Auckland Harbour Board was privatised to become Ports of Auckland, the rules changed.

Rather than continue to hire equipment, the new management decided to buy its own forklifts. The forklift hire business became obsolete overnight.

Porteous took a punt, moved to a cheaper house to provide working capital and opened a caryard in Kingsland.

He and elder son Phil, then a student at Auckland University, ran it. After being granted a motor vehicle dealer's licence, they carved out a niche at the low end of the market for good, cheap cars.

"Shortly after the business opened, with my younger brother Paul, who was already operating as an importer of trucks, I took my first trip to Japan to buy my first batch of stock," Porteous said.

"I had never been there before and knew nothing about the country. Paul showed me the ropes and walked me through the first trip. On that trip I was able to buy 11 cars that met the criteria I had planned for the new business," he said.

Returning home, Porteous prepared for the cars to arrive, doing odd jobs using his mechanical background to keep the cashflow going.

Lack of money, however, forced him to advertise the cars before they arrived in New Zealand.

To his delight, three of the first 11 cars were sold before they reached the wharf. A significant factor in those sales was price.

"I decided at that point it would be my goal to sell quality imported cars at the cheapest possible prices while still maintaining my own high standards of quality control," Porteous said.

The approach proved successful and the business grew quickly. Six months into the first year of trading Phil Porteous came on board to manage the New Zealand side of the operation, leaving Porteous to concentrate on developing supply facilities in Japan.

Phil had just completed a bachelor of property degree at Auckland University and was keen to get involved trading motor vehicles.

At the pinnacle of the budget car operation John or Phil were going to Japan alternately every week to buy stock, importing and selling about 40 cars a month. The increased volumes led them to buy the yard they were renting and to lease another nearby.

And then, from April 1, all car imports, rather than just those built after March 1, 1999, would have to meet international crash safety standards.

The new rule made 90 per cent of the Porteous' stock unavailable for them to import. The family's business was obsolete once again.

A timely conversation with David Schischka, of Action International, left some light at the end of the tunnel.

"This time we became proactive," said Porteous. Employing Schischka's services, father and son set about developing a structure that would allow them to deal with the changes.

"The Government's rule change saw sales almost coming to a complete standstill overnight. We had to realign our business to survive."

Negativity about the rule created uncertainty in the market. Many people believed that pre-96 cars were now unsafe.

"Untrue," said Porteous.

The business had to change its market, so the Porteous focus shifted from price to quality and value.

The pair had to "add credibility to the product they were selling to offer clients services not available at any other used caryard in New Zealand".

After investigating several independent options, they formed alliances with the Automobile Association and Frank Allen Tyres to get safety and pre-purchase checks and new tyres.

"This allowed us to display our cars, although secondhand, with many new-car benefits, and the package is one that we believe is second to none in the used-car market," said Porteous.

It ensured the cars displayed on the yard are independently safety certified.

Market demand is starting to kick in. Porteous said many buyers were thrilled with the packages and guarantees he and Phil offered.

Another family member, Matt, has developed a business designing and manufacturing promotional signage for caryards.

And Catherine, aged 19, having watched her two brothers turn their hand to business, is paying her way through the AUT physiotherapy degree by buying and selling a car here and there. It's a family affair.

In all, the small caryard in Kingsland employs three fulltimers and three part-time people and turns over more than $2 million.

Like many small companies, it had to evolve or die.